“Saving as a method of ending poverty”

Poverty is a major challenge in both developed and developing countries, and poverty reduction is number one among the UN’s Sustainable Development Goals. Paul Odhiambo, 26, a Correspondent from Nairobi in Kenya, applauds the goal to cut poverty by half by 2030, but suggests that target may not be achieved.

I am afraid that most countries, especially developing ones, might not achieve this goal. Why do I say this?

I examined the poverty headcount ratio of four countries: that is, one developed country (USA) and three developing countries (Kenya, Uganda, and Tanzania). The result I found was not pleasing in one of the developing countries, Kenya.

According to United States Census of 2014, the US poverty ratio was at 14.8 per cent with a population of 318.9 million. According to the World Bank figures for 2011 in Tanzania, 2012 in Uganda, and 2015 in Kenya, the poverty ratios stood at 28.2 per cent, 19.5 per cent and 45.9 per cent in that order. The population in Tanzania, Kenya, and Uganda in 2015 were 53,500,000, 46,100,000 and 39,000,000 respectively.

As the population grows there should be sustainable poverty reduction. Regarding these statistics, USA, Uganda and Tanzania are likely to reduce or eradicate poverty within the Sustainable Development Goals timeline. According to figures, Uganda has done well in poverty reduction. In 1992 the poverty ratio in Uganda was 56.4 per cent, and the Ugandans have managed to decrease the ratio to 36.9 per cent by 2012, a span of 20 years.

There are many ways of reducing poverty. In my opinion, savings habits can be the most effective way to end poverty. While other methods aimed at policy and national issues may not engage people directly, saving is something which engages people who feel the effects of poverty.

Most individuals, more so in the developing countries, have poor savings habits, which can derail the fight for poverty reduction. Studies show that developing countries have low savings rates at 17 per cent of the countries’ total per capita income. In Kenya the savings rate is low as 13-14 per cent, but Uganda and Tanzania are among some of the developing countries that have crossed the 20 per cent savings mark. This is a clear sign that practising the habit of saving a portion of one’s income facilitates the process of poverty reduction. For instance, comparing the poverty reduction in Kenya, Uganda, and Tanzania, the two countries (Uganda and Tanzania) with the highest savings rate (greater than 20 per cent) are in a better position to end poverty soon. This is in contrast to Kenya, with the lowest savings rate at 13-14 per cent.

Recently, I had a discussion with a great friend of mine who is now a real estate investor. I wanted to learn what he did in his past years that enabled him to live his current life style. He told me that in his early years he practised savings habits. He worked in public service at a time my country was colonised. He admired what the colonists had that time. During those days, he made a crucial step that changed his life forever. The little money he received as his salary, he saved part of it.

As the saying goes, “the opportunity presents itself for those who are ready”. At the time that the real estate business became a lucrative investment in my country, and having enough money to invest, he seized the opportunity. He was able to invest in many properties and due to his good savings records, the banks were ready to give him loans whenever he needed. When he retired, he had enough passive income to support his family and to create a bright future for his children. He is 73 years old at the moment and still continuing with his savings habit, but putting more focus on teaching people about how to develop the savings habits.

This man’s story intrigued me, and I have learned that if people adopt the money-saving culture, poverty can be a forgotten thing. However, most people have not embraced it, particularly in my country. This culture of poor money saving escalates poverty in most countries. Realisation of the number one Sustainable Development Goal might not come true in most developing countries, unless the concerned bodies work hard in coming up with various ways for people to see the importance of saving.

Money saving, when combined with other methods of poverty reduction, will enable the realisation of the No. 1 Sustainable Development Goal within a short period of time.

I am an industrial chemist and aspiring entrepreneur. I am interested in green chemistry, environmental conservation, good governance, entrepreneurship, chemistry, biochemistry and good education.

I believe if government and different organizations give an opportunity to youths, they can transform their lives and their communities. In many occasions, youths have been considered as needy and hopeless; therefore, they are not allowed to contribute to national matters. However, they are the people who know their problems.

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Opinions expressed in this article are those of the author and do not necessarily represent the views of the Commonwealth Youth Programme. Articles are published in a spirit of dialogue, respect and understanding. If you disagree, why not submit a response?
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